Loan Process

Step 1: Find Out
How
Much You Can Borrow

The first step
in obtaining a loan is to determine how much money you can borrow.
In case of buying a home, you should determine how much home you can
afford even before you begin looking. By answering a few simple questions, we will calculate
your buying power, based on standard lender guidelines.

You may also elect to get pre-approved for a loan which requires verification
of your income, credit, assets and liabilities. It is recommended that
you get pre-approved before you start looking for your new house so you:

Look for properties within your range.

Be in a better position when negotiating with the seller (seller knows your loan is already approved).

LTV and Debt-to-Income Ratios
LTV or Loan-To-Value ratio is the maximum amount of exposure that a lender
is willing to accept in financing your purchase. Lenders are usually prepared
to lend a higher percentage of the value, even up to 100%, to
creditworthy borrowers. Another consideration in approving the maximum
amount of loan for a particular borrower is the ratio of monthly debt
payments (such as auto and personal loans) to income. Rule of thumb states
that your monthly mortgage payments should not exceed 1/3 of your gross monthly
income. Therefore, borrowers with high debt-to-income ratio need to pay a
higher down payment in order to qualify for a lower LTV ratio.

FICO™ Credit Score
FICO™ Credit Scores are widely used by almost all types of lenders in their
credit decision. It is a quantified measure of creditworthiness of an
individual, which is derived from mathematical models developed by Fair
Isaac and Company in San Rafael, California. FICO™ scores reflect credit
risk of the individual in comparison with that of general population. It
is based on a number of factors including past payment history, total
amount of borrowing, length of credit history, search for new credit, and
type of credit established. When you begin shopping around for a new
credit card or a loan, every time a lender runs your credit report it
adversely effects your credit score. It is, therefore, advisable that you
authorize the lender/broker to run your credit report only after you have
chosen to apply for a loan through them.

Self Employed Borrowers
Self employed individuals often find that there are greater hurdles to
borrowing for them than an employed person. For many conventional lenders
the problem with lending to the self employed person is documenting an applicant's
income. Applicants with jobs can provide lenders with pay stubs, and lenders
can verify the information through their employer. In the absence of such
verifiable employment records, lenders rely on income tax returns, which
they typically require for 2 years.

Source of Down Payment
Lenders expect borrowers to come up with sufficient cash for the down
payment and other fees payable by the borrower at the time of funding the
loan. Generally, down payment requirements are made with funds the borrowers have saved. If a borrower
does not have the required down payment they may receive “gift funds” from an acceptable donor with a
signed letter stating that the gifted funds do not have to be paid back.

Step 2: Select
The Right Loan Program

Home loans come in many shapes and sizes. Deciding which loan makes the most
sense for your financial situation and goals means understanding the
benefits of each. Whether you are buying a home or refinancing,
there are 2 basic types of home loans. Each has different reasons you'd choose them.

1) Fixed Rate Mortgage

Fixed rate mortgages usually have terms lasting 15 or 30 years. Throughout
those years, the interest rate and monthly payments remain the same. You
would select this type of loan when you:

Plan to live in home more than 7 years

Like the stability of a fixed principal/interest payment

Don't want to run the risk of future monthly payment increases

Think your income and spending will stay the same

2) Adjustable Rate Mortgage

Adjustable Rate Mortgages (often called ARMs) typically last for 15 or 30
years, just like fixed rate mortgages. But during those years, the interest
rate on the loan may go up or down. Monthly payments increase or decrease.
You would select this type of loan when you:

Step 3: Apply For A Loan

Step 4: Begin Loan Processing

Although lenders conform to standards set by government agencies, loan approval
guidelines vary depending on the terms of each loan. In general, approval is based
on two factors: your ability and willingness to repay the loan and the value of the property.

Once your loan application has been received we will start the loan approval process immediately.
Your loan processor will verify all of the information you have given. If
any discrepancies are found, either the processor or your loan officer
will troubleshoot to straighten them out. This information
includes:

Income/Employment
Check

Is your income sufficient to cover
monthly payments? Industry guidelines are used to evaluate your
income and your debts.

Credit Check

What is your ability to repay debts
when due? Your credit report is reviewed to determine the type
and terms of previous loans. Any lapses or delays in payment are
considered and must be explained.

Asset Evaluation

Do you have the funds necessary to
make the down payment and pay closing costs?

Property Appraisal

Is there sufficient value in the property? The property is appraised to determine market value. Location
and zoning play a part in the evaluation.

Other Documentation

In some cases, additional
documentation might be required before making a final determination
regarding your loan approval.

In order to improve your chances of getting a loan approval:

Fill out your loan application completely. You may use our online forms
to expedite the process.

Respond promptly to any requests for additional documentation especially
if your rate is locked or if your loan is to close by a certain date.

Do not move money into or from your bank accounts
without a paper trail.
If you are receiving money from friends, family or other relatives,
please prepare a gift letter and contact us.

Do not make any major purchases until your loan is closed.
Purchases cause your
debts to increase and might have an adverse affect on your current
application.

Do not go out of town around your loan's closing date. If you plan to be
out of town, you may want to sign a Power of Attorney.

Step 5: Close Your Loan

After your loan is approved, you are ready to sign the final loan documents. You must review the documents
prior to signing and make sure that the interest rate and loan terms are what you were promised. Also,
verify that the name and address on the loan documents are accurate. The signing normally takes place in
front of a notary public.

There are also several fees associated with obtaining a mortgage and transferring property ownership which
you will be expected to pay at closing. Bring a cashiers check for the down payment and closing costs if
required. Personal checks are normally not accepted. You also will need to show your homeowner's insurance
policy, and any other requirements such as flood insurance, plus proof of payment.

Your loan will normally close shortly after you have signed the loan documents. On owner occupied refinance
loan transactions federal law requires that you have 3 days to review the documents before your loan
transaction can close.

About Us

We've been helping customers afford the home of their dreams for many years and we love what we do.